Qatar stocks hit 2013 low as IPO looms

Dubai, April 14, 2013

Qatar's bourse booked its largest one-day drop in four months on Sunday as investors took their cues from weak global markets to sell shares ahead of a huge IPO planned by a new state investment firm in May.

Commodities sold off globally on Friday, while world equity markets fell after a dour reading of US consumer sentiment and poor retail sales reinforced fears of a weak US economy that would hurt global growth. Brent crude lost $3 a barrel on Friday to hit a nine-month low.

"Sentiment was shot down on the back of the drop in global equities and commodities - there is mixed selling from locals and foreigners, with a migration of cash from equities to fixed income," said Ahmed Shehada, head of trading at Qatar National Bank Financial Services.

Qatar underperformed other Gulf markets because of the plan by Doha Global Investment Co, backed by assets from the sovereign wealth fund, to offer shares to the public in May. It is expected ultimately to hold about $12 billion of assets, raising $3 billion from its initial public offer of shares on the Qatar Exchange.

"Locals have been selling some of the names to free up cash for the new issue by Doha Global," Shehada said. Officials have said the company plans to guarantee a 5 percent dividend in its first year. The promise of solid returns from Doha Global appears to have distracted investors from betting on the first-quarter earnings of existing listed companies.

Doha's benchmark broke support on the March low of 8,450 points and retreated 1.2 percent to 8,381 points, its lowest close since Dec. 31 and its biggest one-day percentage loss since Jan. 15.

SAUDI SLIPS

In Saudi Arabia, the index slipped 0.4 percent, down for a second session since Wednesday's 11-month high. Petrochemical stocks were the main drag as they tracked the fall in oil prices; the sector's index lost 1.7 percent.

Banks also fell after Banque Saudi Fransi posted below-forecast earnings and the disappointment spilled across the sector, even though most other banks have reported good earnings. Shares in Saudi Fransi tumbled 6 percent.

Shares in Dubai builder Arabtec slipped 2.7 percent, however, as some investors continued to sell on dilution concerns after shareholders approved its $1.8 billion capital raising plan.

The stock is down 27 percent since it announced the capital-raising plan on Feb. 27, and analysts say the dilution is largely priced in. The firm plans to raise the money in stages, with 2.4 billion dirhams ($653.5 million) to be raised through a rights issue before the end of June.

"You're allowing for capital-raising so growth can come through - that's a positive," said Amer Khan, fund manager at Shuaa Asset Management. "I'm confident that Abu Dhabi has plans for Arabtec," he added, referring to the growing control of Abu Dhabi state fund Aabar Investments in the company. "The only problem is that nobody knows what those plans are." - Reuters